TORONTO - Ontario's municipal workers may have escaped the salary freeze edict in the provincial budget but their city hall bosses were given strong signals Friday to follow the Liberal government's lead.
While the controversial move in Thursday's budget will affect the pay of more than one million workers it does not apply to the approximately 39,000 municipal government employees across Ontario, including police, firefighters and city staff.
That doesn't mean local councils can't cap those salaries, said Finance Minister Dwight Duncan.
"They're certainly welcome to follow our lead," he told The Canadian Press in an interview. "I wouldn't presume to tell them how to do it, but we think this is a good approach."
Duncan said he didn't include towns and cities in the plan to immediately freeze non-unionized public sector wages and cap compensation for unionized workers for two years when existing contracts expire because they are a separate order of government.
"There will be difficult bargaining ahead, but municipalities can certainly pursue a course of action that involves freezing salaries for non-bargained employees, and... for the broader public sector," he said. "We will not be funding increases in overall compensation."
The biggest cost for most local governments is salaries for police and firefighters, and the Association of Municipalities of Ontario said most of those contracts are settled by arbitration, not negotiations, which generally means pay hikes.
"If there are specific outcomes that the province has in mind, we would want to sit down with them and learn more about what reforms the province would introduce to make them possible, particularly given that so many of our collective agreements are determined through interest arbitration," said AMO spokesman Pat Vanini.
"Our fiscal challenges are always top of mind when we sit down to discuss wages and benefits and that will certainly be the case over the next two years."
The provincial government will have to enter talks with the Ontario Provincial Police on a new contract that doesn't include money for a salary increase, and local governments can do the same with their police forces, said Duncan.
"We have to negotiate with the OPP," he said. "I think negotiating with your partners is the right approach."
Some local councils across Ontario, including Toronto, Hamilton and Niagara Falls, have already taken steps to freeze the salaries of their managers and other non-union employees, said Duncan, and other communities should do the same.
"As a responsible level of government they must make decisions based on the needs of their own municipalities and what they see as priorities."
The Progressive Conservatives said the Liberal government's budget increased spending by over $8 billion despite the record $21.3-billion deficit, which they believe sent a signal to municipal leaders and others to keep spending, despite the tough financial times.
"It's a municipal election year and there's going to be lots of pressure and scrutiny on the decisions that they make," said Opposition Leader Tim Hudak. "The province sends signals through transfers and leading by example, and I simply see (Premier) Dalton McGuinty's example as open up the flood gates for more spending."
Reaching agreements to keep all public sector salaries from increasing for at least two years won't be easy, but it can be done, insisted Duncan.
"I'm sure those negotiations will be difficult," he admitted.
